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Economic and Marketing Information for Indiana Farmers (May 31, 1965)

Economic and Marketing Information for Indiana Farmers (May 31, 1965)

Economic and Marketing Information
FOR INDIANA FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
by the Agricultural Staff of Purdue University, Lafayette, Indiana
May 31, 1965
Future of the Beef Industry in Indiana
J. H. Armstrong and M. P. Mitchell, Agricultural Economics
ummary
Significant changes have been occurring within the
eef industry during the past decade. The most signifi-
ant changes have been the increase in beef cattle num-
ers and in cattle feeding. These increases are primarily
ttributable to the relative strong demand for beef and
jsultant favorable prices.
Indiana will share in future growth in the beef indus-
y because of (1) an increasing demand for beef, (2)
idiana's favorable competitive position in the produc-
on of feed grain for slaughter cattle production, and (3)
te opportunities for using surplus forage feed and labor
i feeder cattle production.
Profit margins in the cattle business in general will
itnain quite narrow during the next several years. Even
ith the rapidly growing demand for beef, the more
idespread distribution of the beef industry and more
ivergent interests in beef cow herds and cattle feeding
perations will tend to keep production expanding more
ipidly than demand. This will tend to keep profits in
oth the feeding and feeder calf production phases of the
ldustry at relatively low levels until such time as a
umber of adjustments are made.
Beef cow numbers in Indiana are expected to increase
jrther as the demand for beef increases and greater
se is made of forages and crop salvages. However,
clical adjustments can be expected. Beef feeding will
ontinue as a major enterprise in Indiana, although other
reas may show greater rates of increase. Cattle feed-
ig, as with most other types of livestock programs, will
:nd to become more specialized and larger. With an
tcreasing demand for feeder cattle in the West, the de-
elopment of beef production in the South has worked to
te advantage of Indiana feeders. The future growth in
attle feeding in Indiana will be largely dependent upon
te competition from other enterprises, specifically crop
trming, hog feeding and dairying.
►omestic Demand for Beef
The increasing demand for beef during the past decade
as been a bright spot in the beef industry. Increasing
opulation and incomes as well as growing consumer
reference for beef have all contributed to the increased
emand for beef. Estimates of the total increase in de-
tand for beef are from 3 to 4 percent per year.
Foreign Demand for Beef
During recent years various attempts have been made
to export meat and meat products from the United States.
While some shipments of fresh-frozen fed beef and some
live animals for feeding have been made to Europe, most
exports have been by-products such as tallow, hides, and
variety meats. Continued emphasis will be placed on exporting both slaughter beef and live animals during the
next several years, but this will remain a relatively small
portion of total production and have little overall influence on cattle prices.
Supply-Demand Price Relationships
Although beef has a favorable long-run position with
respect to increases in demand, this does not eliminate
price fluctuations primarily associated with short-run
changes in the supply of beef. Thus, both seasonal and
cyclical price changes will continue to be problems in the
beef industry.
Studies show that after allowing for an annual increase in demand of 3 to 4 percent per year and keeping other factors constant, a one percent change in the
supply of beef marketed will affect price for slaughter
livestock about 1.2 to 1.5 percent in the opposite direction. It is primarily because of this supply-price relationship that increases in beef production of 10 to 12 percent per year, as occurred in 1964, results in rather drastic short-run declines in beef prices. Seasonality, changes
in consumer preferences, the supply of competing meats,
weather and many other factors also influence this relationship at various times and to varying degrees.
Present Position of the Beef Industry in the U. S.
Seven years' buildup in cattle numbers, from 91 million on January 1, 1958, to 107 million head on January
1, 1965, has placed the cattle industry in a position heavily
dependent upon forage feed conditions. During this period beef cattle numbers have increased from 59 to 81
million head while dairy cattle numbers have declined
from about 32 million to 26 million head. January 1,
1965, cattle inventory numbers indicate the industry is
at or near the peak of the present numbers cycle. However, the changing geographic distribution of the beef
cow herd industry, particularly into the South, Southeast,

Economic and Marketing Information
FOR INDIANA FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
by the Agricultural Staff of Purdue University, Lafayette, Indiana
May 31, 1965
Future of the Beef Industry in Indiana
J. H. Armstrong and M. P. Mitchell, Agricultural Economics
ummary
Significant changes have been occurring within the
eef industry during the past decade. The most signifi-
ant changes have been the increase in beef cattle num-
ers and in cattle feeding. These increases are primarily
ttributable to the relative strong demand for beef and
jsultant favorable prices.
Indiana will share in future growth in the beef indus-
y because of (1) an increasing demand for beef, (2)
idiana's favorable competitive position in the produc-
on of feed grain for slaughter cattle production, and (3)
te opportunities for using surplus forage feed and labor
i feeder cattle production.
Profit margins in the cattle business in general will
itnain quite narrow during the next several years. Even
ith the rapidly growing demand for beef, the more
idespread distribution of the beef industry and more
ivergent interests in beef cow herds and cattle feeding
perations will tend to keep production expanding more
ipidly than demand. This will tend to keep profits in
oth the feeding and feeder calf production phases of the
ldustry at relatively low levels until such time as a
umber of adjustments are made.
Beef cow numbers in Indiana are expected to increase
jrther as the demand for beef increases and greater
se is made of forages and crop salvages. However,
clical adjustments can be expected. Beef feeding will
ontinue as a major enterprise in Indiana, although other
reas may show greater rates of increase. Cattle feed-
ig, as with most other types of livestock programs, will
:nd to become more specialized and larger. With an
tcreasing demand for feeder cattle in the West, the de-
elopment of beef production in the South has worked to
te advantage of Indiana feeders. The future growth in
attle feeding in Indiana will be largely dependent upon
te competition from other enterprises, specifically crop
trming, hog feeding and dairying.
►omestic Demand for Beef
The increasing demand for beef during the past decade
as been a bright spot in the beef industry. Increasing
opulation and incomes as well as growing consumer
reference for beef have all contributed to the increased
emand for beef. Estimates of the total increase in de-
tand for beef are from 3 to 4 percent per year.
Foreign Demand for Beef
During recent years various attempts have been made
to export meat and meat products from the United States.
While some shipments of fresh-frozen fed beef and some
live animals for feeding have been made to Europe, most
exports have been by-products such as tallow, hides, and
variety meats. Continued emphasis will be placed on exporting both slaughter beef and live animals during the
next several years, but this will remain a relatively small
portion of total production and have little overall influence on cattle prices.
Supply-Demand Price Relationships
Although beef has a favorable long-run position with
respect to increases in demand, this does not eliminate
price fluctuations primarily associated with short-run
changes in the supply of beef. Thus, both seasonal and
cyclical price changes will continue to be problems in the
beef industry.
Studies show that after allowing for an annual increase in demand of 3 to 4 percent per year and keeping other factors constant, a one percent change in the
supply of beef marketed will affect price for slaughter
livestock about 1.2 to 1.5 percent in the opposite direction. It is primarily because of this supply-price relationship that increases in beef production of 10 to 12 percent per year, as occurred in 1964, results in rather drastic short-run declines in beef prices. Seasonality, changes
in consumer preferences, the supply of competing meats,
weather and many other factors also influence this relationship at various times and to varying degrees.
Present Position of the Beef Industry in the U. S.
Seven years' buildup in cattle numbers, from 91 million on January 1, 1958, to 107 million head on January
1, 1965, has placed the cattle industry in a position heavily
dependent upon forage feed conditions. During this period beef cattle numbers have increased from 59 to 81
million head while dairy cattle numbers have declined
from about 32 million to 26 million head. January 1,
1965, cattle inventory numbers indicate the industry is
at or near the peak of the present numbers cycle. However, the changing geographic distribution of the beef
cow herd industry, particularly into the South, Southeast,